TymeBank, one of South Africa’s leading digital banking institutions, is preparing to pursue legal action against the Department of Home Affairs over its decision to significantly increase identity verification fees. The move, set to take effect on 1 July, has been widely criticised by financial and telecommunications sectors, who argue that the hikes will hurt consumers and slow progress toward broader digital and financial inclusion. At the centre of the controversy is Home Affairs Minister Leon Schreiber’s policy shift, which could dramatically reshape access to affordable, real-time ID checks.
Fee Hikes and Their Implications
Under the revised pricing structure, companies will be charged R10 ($0.56) per real-time identity verification query against the National Population Register—up from as little as 15 cents ($0.008) . According to TymeBank co-founder and current CEO of its parent company Tyme Group, Coen Jonker, this 6,500% increase will make South Africa one of the most expensive countries in the world for this critical service. While the department is offering overnight batch processing at R1 ($0.056) per query as an alternative, Jonker contends this does not meet the needs of fintechs like TymeBank that rely on instant access to data.
Impact on Compliance and the Financial Sector
These identity verifications are a legal requirement under key pieces of legislation, such as the Financial Intelligence Centre Act (FICA) and the Regulation of Interception of Communications and Provision of Communication-related Information Act (RICA). Banks, telecommunications operators, and other service providers use these checks to combat money laundering, fraud, and other forms of financial crime. Industry leaders are warning that the increased costs may undermine their ability to comply with these laws, potentially hampering the very objectives the regulations aim to achieve.
The Fintech Perspective: A Disproportionate Burden
Jonker emphasised that newer, digitally native banks like TymeBank are disproportionately affected by the change because their business models depend on cost-effective, real-time identity verification. He argued that, unlike large, traditional banks, fintechs do not have legacy infrastructure to absorb or mitigate these new expenses. According to Jonker, forcing companies to pay such a premium for a low-cost digital service unfairly burdens those trying to serve low-income and unbanked populations.
A Call for Subsidisation and Equity
In his comments and an open letter to Minister Schreiber earlier this week, Jonker argued that government-run verification systems should be offered at cost or even subsidised, especially when the service supports public objectives like financial inclusion and anti-crime initiatives. He noted that the technical cost of processing a single database query amounts to only a few cents, making the R10 fee ($0.56) disproportionate and unjustifiable. From his perspective, the policy reflects a misunderstanding of the broader social and economic implications tied to digital infrastructure pricing.
Backlash and Broader Industry Concerns
TymeBank is not alone in its opposition. Telecommunications companies and other consumer-facing businesses have also expressed concern over the decision, warning of unintended consequences for South Africa’s poorest citizens. Critics argue that the new fees effectively penalise those who can least afford them and risk stalling digital innovation and financial access, particularly in underserved areas.
As TymeBank considers taking the matter to court, the debate underscores a deeper question about the role of government in fostering – or hindering – inclusive digital growth. What is framed as a necessary cost-recovery measure by the Department of Home Affairs is being interpreted by industry leaders as a regressive financial barrier. With only days left before the new fee structure is implemented, the clash between policy intent and practical impact may shape the future of digital banking and financial access in South Africa.